In 2023, sales in the heavy truck industry recovered from the bottom, domestic sales growth picked up, and overseas growth continued. Judging from the absolute value of sales, domestic sales are still below the central level. With marginal economic policy stimulus, engineering and logistics are expected to continue to recover, and the natural gas truck industry chain is optimistic.
The Zhitong Finance App learned that Guolian Securities released a research report saying that the heavy truck industry's sales volume recovered from the bottom in 2023, domestic sales growth picked up, and overseas growth continued. Judging from the absolute value of sales, domestic sales are still below the central level. With marginal economic policy stimulus, engineering and logistics are expected to continue to recover, and the natural gas truck industry chain is optimistic. In terms of exports, growth in emerging markets such as Central Asia and South America is expected to hedge against Russia's incremental decline and continue to grow steadily as a whole. Due to the increase in the share of exports and natural gas, the profit structure has been greatly optimized, and profit elasticity is stronger than sales elasticity. Combined with low capital expenses and an excellent competitive pattern, the commercial vehicle dividend ratio continues to rise. Key recommendations: Weichai Power (000338.SZ), Sinotruk (000951.SZ).
The main views of Guolian Securities are as follows:
Downstream demand improved marginally, and overall sales slightly exceeded expectations
According to data released by First Commercial Vehicle Network, the sales volume of the heavy truck industry in April 2024 was about 87,000, +5% year-on-year, and -25% month-on-month, slightly exceeding market expectations. From January to April, cumulative sales of about 360,000 heavy trucks were sold, +11% over the same period last year, and overall sales continued to recover. According to insurance data, 135,000 vehicles were sold in January-March, -17.1% year-on-year, mainly due to the high sales base in early 2023. Heavy truck exports in January-March were 74,000 units (China Automobile Association data), +14.0% year-on-year, continuing the high growth trend. The growth in emerging markets such as Central Asia and South America effectively hedged the incremental decline in the Russian market.
In terms of industry inventories, the overall increase in January-March was 63,000 vehicles. From January to March 2024, the sales volume of heavy natural gas trucks was 44,000 units, up 222.2% year on year. The penetration rate was 32.8%, up 23.9 pcts year on year. In April, the diesel-natural gas price gap reached 3.98 yuan/kg, an increase of about 13.0% over the same period last year. Gas vehicles are very economical in this range, and it is expected that April will continue the upward trend in gas truck penetration.
In terms of downstream demand, the year-on-year ratio for new real estate construction in January-March was -27.8%, and the logistics price index (April 24) was 1040.2, +15.58 month-on-month, and +1.11 year-on-year. The marginal year-on-month increase was significant, exceeding market expectations, and is expected to accelerate the recovery of heavy logistics truck sales. In April, the domestic manufacturing PMI was 50.4%, -0.4 pct month-on-month, and the construction PMI was 56.3%, +0.1 pct month-on-month, all above the boom and dry line.
Guiding a new round of large-scale equipment updates and eliminating national IV vehicles ahead of schedule is expected to drive industry growth
On March 1, the Executive Meeting of the State Council reviewed and approved the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” to promote a new round of large-scale equipment renewal and trade-in of consumer goods, which is expected to drive the growth of related equipment and heavy trucks. In November 2022, 15 departments including the Ministry of Ecology and Environment jointly issued an action plan to combat pollution, proposing that by 2025, new energy and national six emission standard trucks will account for more than 40%. Beginning in 2023, some regions, such as Beijing, Zhejiang, Shandong, and Henan, will begin to accelerate the elimination of national IV vehicles and provide elimination subsidies. By the end of 2022, the number of heavy trucks owned nationwide was 8.94 million. After deducting the sales volume of China 5 and 6 since 2017 (7.17 million), the remaining 1.77 million vehicles were to be phased out in China IV and below. Sales are expected to reach around 1.1 million units in 2024.
In terms of pattern, due to seasonal factors, the market share of various car companies fluctuates greatly
From January to March 2024, the cumulative sales volume of Sinotruk, FAW Jiefang, Dongfeng Group, Shaanxi Automobile Group, and Foton Motor was about 7.7/5.92/5.10/3.89/20,800 vehicles, +13%/+33%/+19%/+14%/-21%; the market share was about 28.1%/21.7%/19.4%/14.3%/7.6%, compared with +0.1/+3.3/-1.4/-3.2pct in 2023. From January to March 2024, the CR3 of the heavy truck industry was about 68.6%, an increase of 4.5 pct over the previous year, and the market share was further concentrated in the leading position.
Risk warning: Geographical conflicts have intensified, driving up LNG prices; the recovery of the logistics industry falls short of expectations, affecting cargo and tractor sales; policy implementation falls short of expectations and cannot effectively drive demand for terminal updates and replacements.